TaxTMI 
TaxTMI 
2018 (12) TMI 844
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....Notification No. 01/2018 dated 25th January 2018, if the said supplies are in relation to an housing project enjoying Infra status vide F No 13/6/2009-INF dated 30th March 2017 of Government of India, in Ministry of Finance, Dept. of Economic Affairs? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / MGST Act would be mentioned as being under the "GST Act". 02. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- Statements of relevant facts having a bearing on the questions raised and statement containing the applicant's interpretation of law. The applicant M/s. Eiffel Hills And Dales Developers Pvt Ltd having GSTIN 27AABCE8028J1Z1 is a construction company engaged in the business of Mechanical, electrical and....
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....act? In reply to the above we state that, as per the draft contracts agreement for Electrical & Plumbing works to be undertaken by us and submitted in this behalf to the GST Dept. on 08.08.2018, the scope of work for electrical contract includes complete installation, testing & Commissioning of Substation Electrical Work, HT & LT Cabling work, DG & Cabling Work, Street light & Cabling Works whereas the scope of work for plumbing contract includes complete external plumbing work, laying of RCC hume pipes/Gl pipes/UPVC Pipes for storm water lines, construction of chambers. With reference to section 3(26) of General Clause Immovable Property is defined as "Land, benefits to arise out of land, and things attached to the earth or permanently fastened to anything attached to the earth." Further Works Contract as defined in clause (119) of Section 2 of the CGST Act 2017, means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in....
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....fighting and electrical infrastructure systems to a wide range of commercial projects. (II) The GST is applicable to following as per notification No. 20/2017 CT (rate) dated 22/08/2017 as amended by notification No. 1/2018 rate dated 25/01/2018. The details of exemption at S. No. V are as under: (v) Composite supply of works contract as defined in clause (119) of sec 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction, erection, commissioning, or installation of original works pertaining to, (a) Railways, including monorail and metro; (vide notification No. 1/2018 central Tax rate dated 25/01/2018 excluding deleted and replaced by including) (b) A single residential unit otherwise than as a part of a residential complex; (c) low-cost houses up to a carpet area of 60 square meters per house in a housing project approved by competent authority empowered under the Scheme of Affordable Housing in Partnership' framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India; (d) Low cost houses up to a carpet area of 60 square meters per house in a housing project approved by the competent auth....
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....oning or installation of plant, machinery or equipment or structures, whether pre-fabricated or otherwise; III) The definition of Immovable Property as defined u/Section 3(26) of the General Clause, "Immovable property" shall include land, benefits to arise out of land, and things attached to the earth or permanently fastened to anything attached to the earth. IV) In view of the above, the reply is under; 1) Whether MEP activities (Mechanical, Electrical, plumbing Works) undertaken by the applicant falls within the definition of composite supply of works contract as defined under Section 2(119) of Central GST Act? Ans: - As per the Annexure II of the application dated 28.06.18 for the Advance ruling, the MEP activity provided by the applicant includes design, engineering, supply, installation and commissioning of plumbing, firefighting and electrical infrastructure systems to a wide range of commercial projects. The definition of Immovable property as defined u/Section 3(26) of the General Clause, "Immovable property" shall include land, benefits to arise out of land, and things attached to the earth or permanently fastened to anything attached to the earth. If th....
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....benefits of Central Tax-Rate Notification No. 01/2018 dated 25th January 2018 subject to fulfilment of other conditions of the notification. Additional submissions given by the Officer- Please refer to this office letter of even no. dated 30.07.2018 and letter dated 14.08.2018 received from M/s. Eiffel Hills and Dales Developers Pvt. Ltd. on the above mentioned subject. In view of the above, the comments are as under; Q.1 Whether MEP activities (Mechanical, Electrical, plumbing Works) undertaken by the applicant falls within the definition of composite supply of works contract as defined under Section 2(119) of Central GST Act? Comments: As per further instructions received from Member, Advance ruling authority, GST, Mumbai during PH on 31.07.2018 that in order to determine the nature of supply i.e. "Composite Supply", we have to study the contract. The applicant has submitted separate Work Orders (Draft) for electrical work and plumbing work vide letter dated 14.08.2018 (received on 21.08.2018). Our observation is as below on the basis of extracts of the draft agreement: "ELECTRICAL WORK: Contract type: The Contract shall be divided into two types: A)....
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....rally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply." There are following elements to be present to qualify as such for composite supply 1. There should be two or more taxable services. 2. They should be naturally bundled. 3. Supply in conjunction with each other, 4. in the ordinary course of business; 5. one of which is a principal supply. It is observed that "in the ordinary course of business", the customer controls only the quality of that goods and services and the timelines Of the project. However, the quantity of the goods is left to the control of the Contractor. But in the instant case, as per the Service Work Order, they are controlling both. As per Annexure '1 they are billing the goods and labour cost separately. Hence, these are two different supplies to be treated as such instead of composite supply. Annexure - I (shall be treated as part of SWO) Schedule of Item quantities with Specifications & applicable Rates Contractor: Company Name: Site Name: SWO: Location:- Infra Subject:- Service Work Order for Supply, Installa....
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....rovide copies of contracts in respect of both their questions. Jurisdictional Officer, Sh. Said Hakim Supt., Division - III, Pune appeared and made written submissions. The application was admitted and called for final hearing on 04.09.2018, Sh. Narender Varma, Manager along with Sh. Govind Soni, Manager Tax appeared. They made detailed oral submissions in respect of their application. Jurisdictional Officer, Sh. Said Hakim Supt., Division - III, Pune appeared and made written submissions. We were heard from both the sides. 05. OBSERVATIONS We have gone through the facts of the case. The issue put before us is in respect of a classification and rate of tax on transactions effected which would be on the lines thus - We have been informed of the activities carried on by the applicant which include design, engineering, supply, installation and commissioning of plumbing, firefighting and electrical infrastructure to a wide range commercial project. Applicant in furtherance of business has entered into an agreement that is draft contract agreement with a Developer/ Builder for electrical and plumbing work. Applicant has raised question on the basis of the draft agreeme....
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....e present tax structure prevailed as on date. However, any new levy of taxes or change in present tax structure as implemented by Govt. authorities during the tenure of the Contract will be assessed, mutually discussed, agreed upon & paid accordingly. General & Special Conditions of Contract 1. The Contractor shall execute and complete the work shown upon the drawings and contained in the Tender document, as revised and modified from time to time and issued to the Contractor, and shall execute the work as per the terms, conditions and specifications contained in the Tender document, subject to any modifications contained in this Work Contract. 2. The scope of work includes all resources, material, machinery, Scaffolding, tools, tackles, Consumables, curing pipe, Light fixtures & wiring, control panel, etc. other than FOC material supplied by company unless explicitly mentioned. 3. Coordination with Client, Architect, Consultants, Project Manager, etc.; wherever applicable shall be included in Services of Contractors' Scope of Work. 4. The Contractor shall afford every reasonable facility to any other agency employed by the Company for carrying out of works relating t....
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.... and Payment Terms:- This contract is Item Rate labour plus material contract. A contract to carry out work in respect of the scope of work defined in the said conditions in the Tender document as modified by this Work Contract to be paid for according to actual measured quantities at the rates contained in the schedule, as per 'Annexure-A'. R.A. Bill and Final Bill:- 1. Contractor is entitled to submit his R.A. Bill on Milestone basis duly defined & mutually agreed while signing the Work Order. On receipt of such R.A. Bill and after an assessment amount shall be released upon thorough scrutiny of the said Bill within next 15 working days. 2. Similarly, upon satisfactory completion of awarded work, Contractor shall submit Full and Final Bill duly supported by all requisite measurements, reconciliation statement for Client supplied material and statement showing reconciliation of advances paid till date, etc.to our Billing department. Payment in the form of full and final settlement excluding 5% Retention amount shall be made upon thorough scrutiny of the Bill. Mode of Measurements:- Mode of measurements for all the tasks shall be in accordance with the provisions ....
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....fixed pre-defined prices of required material component as finalized by the client, to be procured from client defined Contractor and with the following terms and conditions :- 1. Your contract is finalized on the basis of [(Material + 15% profit on Material) + labour + 3% Overheads & Wastages.] 2. Material component is to be derived on the basis of material indicated in item description & Other miscellaneous material required to complete work even if not indicated in item description. 3. Take of sheet of the Material, based on GFC drawing, required to complete the work in all respect, mutually agreed by both the Contractor & the Client shall be considered as the basis for arriving at Material Cost. 4. Basic rates of materials shall be indicated by client along with list of approved Contractors for 30 days payment credit. 5. Any variation in basic rate beyond a limit of (+/-) 5% due to market fluctuation shall be conidered for payment on actuals in respective RA bills subject to prior approval from client. 6. Labour component is to be derived on the basis of cost towards labour work for installation & other misc work including t....
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.... date and the present statutory requirements of Local / Govt. authorities, any new levy of taxes or change in present tax structure and any additional expenditure to be incurred towards any statutory changes enforced by Local / Govt. authorities hereafter & till the completion of work will be reimbursed by the Client at actuals. Scope of Work:- The Scope of Work for the Electrical Infra Works shall comprise of the following and as mentioned in attached "Annexure I- Bill of Quantities":- a. Based on our mutually agreed terms, we will provide an ample storage space within the site premises. You need to ensure that the material procured & delivered at the work site under every lot shall be thus kept / properly stacked within the storage space defined & provided by the Client including an aid for its proper Lock & Key arrangement & which shall be dedicatedly controlled, operated & thoroughly secured by you & your team on day to day basis until the satisfactory completion & handing over of the awarded scope of work With due material reconciliation. Any pilferage, misplace or theft of the Client supplied material, which shall be further issued & kept under your control & custody....
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....e: -The Total Value of awarded scope of Contract pertaining to the subject matter is works out to the tune of INR._______(before Taxes) & after adding an applicable GST@ ____%, the Total Value of work is stands at INR._____. The contract value is arrived based on the present tax structure on date and the present statutory requirements of Local / Govt. authorities, any new levy of taxes or change in present tax structure and any additional expenditure to be incurred towards any statutory changes enforced by Local / Govt. authorities hereafter & till the completion of work will be reimbursed by the Client at actuals. 3. Scope of Work:- The Scope of Work for the Electrical Infra Works shall comprise of the following and as mentioned in attached "Annexure B Bill of Quantities":- a. Based on our mutually agreed terms, we will provide & handover to you an ample storage space within the site premises. You need to ensure that the material procured & delivered at the work site under every lot shall be thus kept / properly stacked within the storage space defined & provided by the Client including an aid for its proper Lock & Key arrangement & which shall be dedicatedly controlled, ....
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....ts, reconciliation statement for Client supplied material and Statement showing reconciliation of advances paid till date, etc.to our Billing department. Payment in the form of full and final settlement excluding 5% Retention amount will be made within 45 days starting from its date of receipt of certified copy of said Full & Final Bill at our Head Office.. d. Contractor shall submit reconciliation sheet of material supplied by the Client on FOC basis along with each milestone based bill duly assessed & certified by our EIC/MEP Department & in the event of any variation in the material (both in the form of wastage or as an excess consumption ) noticed beyond a prescribed limit as defined herein above under Clause 3-C then same shall be account for on Contractors Part & the cost of the same at actuals shall be recovered from the respective milestone based bill or his Full & Final settlement. e. The Contractor shall also submit the relevant proofs of the payments made towards the Statutory Compliances like Labor Taxes, PF, ESIC, etc. as an enclosure with each Milestone Bill as mandatory submittals. In the event if the Contractor fails to satisfy Clients / Consultants in achi....
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....of Works Contract. The GST Act provides definition of Composite Supply which is as below: S.2(30) of the Act, "composite supply" means a supply made by a taxable person to a recipient consisting, of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply. Illustration. Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply. From the detailed scrutiny of the proposed contract we find that the contract like the one at hand which includes Design, engineering, work laying of RCC Hume pipe/GI pipe etc. for storm waterline and construction of chambers involves more than two taxable supplies in the nature of resources, material and machinery. We also notice that large number of service receivers of such bundle of services mostly expect plumbing work to be provided as a package in the ordinary course of business. In the light of above observation the plumbing contract constitute a ....
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.... supply of goods and services. We observe that all the activities to be undertaken by the applicant pursuant to agreement are integral parts of the performance of the contractual obligation by the applicant. In order to comply with the contractual obligation cast on the applicant, the applicant would be required to do various acts as per the scope of work. In our view, the acts to be committed by the applicant cannot be divided into two parts, namely supply of goods and services which are in fact inseparable. Accordingly we reject the contention of the jurisdictional officer and reiterate our stand that the plumbing contract is indivisible works contract pertaining to immovable property within the scope of section 2(119) of the GST Act. We now take up second contract comprising of compete installation testing and commissioning and satisfactory handing order of substation electrical works, HT & LT cabling works, DG and cabling works, street light and cabling. In this contract we also find that applicant would be required to do various acts which includes design, supply, installation and commissioning of substation that is electrical infrastructure. This is also a turnkey proje....